Dollars and Jens
Tuesday, July 31, 2007
I imagine those who care are likely to know, but I feel like commenting on the release of the government's first estimate on Q2 GDP growth at a 3.4% annual rate. Last quarter it was 0.6%.

3.4% is bigger.

Interestingly, the consumer spending that has been dragging GDP kicking and screaming higher for the last few years lost a great deal of its momentum; on the other hand, imports were lower and exports higher. The two effects almost exactly offset; the total of the two contributed to 2.1% of GDP growth in each quarter. Let's set that part of the story aside as consumers contributing the same amount each quarter, but foreign consumers this quarter rather than domestic ones. (That's not quite right, but it's maybe close enough.)

The other items I notice are a 0.8% in national defense consumption, 0.8% in inventory build-up, and 1.0% in "fixed non-residential investment", viz. what laymen tend to think of as investment. Inventory build-up is fairly mean-reverting, and backing that out gives about 1 1/4% growth for Q1 and 3 1/4% for Q2.

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